Global Economy Shows Mixed Signs of Recovery Amid Ongoing Inflationary Pressure

Global economic indicators are showing mixed signs of recovery and continued inflationary pressure. In the US, the personal consumption expenditures price index, excluding food and energy, rose in line with expectations in July, but the annual gauge remained stuck at a stubborn 3.3%. This comes as Federal Reserve Chairman Kevin Warsh emphasized his desire to see underlying inflation clearly heading lower.

Elsewhere, the German economy showed signs of recovery, while inflation accelerated in Spain and France. In China, growth in industrial profits continued to slow. The numbers add to a string of reports suggesting the global economy cooled in July after robust spending earlier in the summer.

A nearly 10% increase in US corporate profits propelled a measure of profit margins to the widest on record in the second quarter, reflecting a strong earnings season helped along by price hikes and resilient consumers. Canada's current account surplus came in at more than twice economists' expectations as crude oil and bitumen exports jumped to a record.

Brazil's annual inflation rate fell below the ceiling of the target range in early August, easing pressure on central bankers and providing President Luiz Inácio Lula da Silva with a tailwind as he seeks reelection. Mexico's economy bounced back temporarily in the second quarter while inflation ticked up above the target midpoint.